HP 10bII+ Calculator Problems Flashcards
80,000 loan amount
9.75 interest
30 year fixed loan
List Keystrokes to calculate principal, interest and remaining loan amount after 10 years
12 (GLD) P/YR 80000 +/- PV 9.75 I/YR 30 (GLD) xP/YR PMT
1 INPUT 120 (GLD) AMORT
= to cycle through values
Prin = 7537.01 Int = 74941.80 Bal = -72462.98
Bob has been investing $5,000 at the end of each year for the past 12 years. How much has accumulated assuming he has earned 10% compounded annually on his investment.
1 (GLD) P/YR 5000 +/- PMT 10 I/YR 12 N FV
<106,921.42>
Your client wants to buy an investment that will produce positive cash flows of $6000, $7000 and $8000 over a three year period. At the end of three years, he will sell it for $115,000. He needs to make a return of at least 12%. What amount should he pay for the investment
0 CFj 6000 CFj 7000 CFj 123000 CFj 12 I/YR (GLD) NPV
Portfolio XYZ has the following characteristics:
Market value beginning of year 1: $100,000
Capital Withdrawals: end of year 1 $4,000
end of year 2 $5,000
end of year 3 $6,000
Market value end of year 3: $120,000
Based on the portfolio characteristics above, what is the dollar weighted rate of return?
100000 +/- CFj 4000 CFj 5000 CFj 126000 CFj (GLD) IRR/YR
<10.92%>
A Client deposited $100,000 into an investment. The investment produced positive cash flows of $6,000, $7,000, $8,000 over a three-year period. Then at the end of three years, he sold it for $115,000. If a client had a required rate of return of 12%, what was the NPV?
100000 +/- CFj 6000 CFj 7000 CFj 123000 CFj 12 I/YR (GLD) NPV
Laura has to make payments of $10,000 per year 6 years from now. She will have to make 5 yearly payments at the beginning of the 6th year. She feels she can make 10% after tax return. How much does she need to set aside today to make future payments?
(GLD) Beg/End 10000 PMT 10 I/YR 5 N PV <41699>
41699 FV
10 I/YR
5 N
PV
<25892>
Client currently has $1,000,000
Wants to retire in 10 years and draw $150,000 per year for 25 years of retirement.
At the end of retirement they want to leave $1,000,000 to their family members.
What return do they need to accomplish this?
1000000 +/- CFj 0 CFj 10 (GLD) Nj 150000 CFj 25 (GLD) Nj 1000000 CFj (GLD) IRR/YR
<6.88%>
John wants to fund college for his 3 year old. He feels college will cost $20000 per year in “today’s dollars”. He feels inflation will be 3% and that his investments will grow at 7% after tax. What amount of yearly contributions does he need to make at the beginning of the next 15 years?
Explain conceptually the steps, then do key presses
- Inflate current cost by 15 years to determine college year 1 cost
- Determine real rate of return
- Calculate present value of account to make payments with real rate of return for 4 years
- Determine yearly contributions needed at expected growth rate to have correct amount when college starts.
- 20000 PV, 3 I/YR, 15 N, FV
- 1.07 / 1.03 - 1 x 100 <3.883%>
- (GLD) BEG/END, 31159 PMT, 3.883 I/YR, 4 N, PV
- (GLD) BEG/END, 117820 +/- FV, 7 I/YR, 15 N, PMT
Mrs. Caldwell purchased an annuity for $100,000 5 years ago. It paid a 6% fixed rate and has a current FMV of $165,000. She has decided to retire and annuitize the contract using a 20 year single life expectancy. If the annuity pays $1,000 per month, how much of her monthly payment is included in Mrs. Caldwell’s taxable income?
Basis
——————- x payment = non-taxable portion
Total benefit
$100,000 $100,000
——————— = —————— x $1000 = $417 non-tax
20 x 12 x 1000 $240,000
$1000 - $17 = $583 (Remember: Answer the question)
NOTE: After 20 years, the entire payment is taxable income
Damage to home of $36,000. Value of home and land = $500,000 Replacement cost of home = $400,000 Insurance amount = $300,000 Deductible = $5,000
How much does the insurance company pay?
Residential required insurance is 80%
Commercial required is 90%.
Insurance carried
———————— x Loss - Deductible = Amt paid
Insurance required
$300k
————- x $36,000 - $5,000
$320k
Invest in Stock A @ $10 End of Year 1 - A = $15 End of Year 2 - A = $22.50 End of Year 3 - A = $22.50 End of Year 4 - A = $11.25
What is time weighted return on the stock?
Step 1 = Multiply the 1+Returns
1.5 x 1.5 x 1 x 0.5 = 1.125
Step 2 = Calculate I/YR
4 N, 1 +/- PV, 1.125 FV, I/YR
<2.9884>
Stock increases in value by 10%, then 8%, then loses 3% in the final year. What is the Arithmatic mean? What is the geometric mean?
Arithmatic Mean = Add together, divide by periods
10+8-3 = 15 / 3 = 5%
Geometric Mean = Multiply the 1+returns, Calculate I/YR
1.1 x 1.08 x 0.97 = 1.1524
3 N, 1 +/- PV, 1.1524 FV, I/YR
<4.8418>
Given the following data, and treasury return, what is the sharpe measure for ABC
ABC Stock: 10%, 12%, 18%, -20%
Treasury: 2%, 4%, 1%, 3%
1st Calc Mean and Std Deviation
10∑+, 12∑+, 18∑+, 20 +/-∑+
(GLD) mean (7) = 5
(GLD) Std Dev (8) = 17
2nd Calculate Sharpe
(Return Portfolio - Risk Free) / Std Deviation
(5-2.5) / 17 =
